State power, state embeddedness, and national development in less developed countries: A cross-national analysis

In this article, we test the prevailing statist argument about the state’s contribution to economic development in less developed countries (LDCs). State power in terms of centralized control of societal resources has been long considered a primary factor for economic growth. From the embeddedness perspective, the state’s effective embedding in the economy advances productive growth, while state power actually operates as a structural precondition of such policy action. Featured in our measurement are representative and financial embeddedness (operationalized as the central government’s tax income and its lending to the private sector and local states, respectively). The empirical testing is based on a pooled cross-national data of sixty-one underdeveloped countries. As indicated from modeling both manufacturing growth and increase in GNP per capita as dependent variables (during the period 1975–1990), the state power variable does not produce expected growth outcomes. However, two embedded state measures display significant but sectorbiased growth effects only for manufacturing production. Herein we further compare strong state power countries with weak ones, concluding that state power serves as a structural prerequisite so that late industrialization for LDCs can benefit from the growth coalitions in which the central state collaborates with (rather than dominates) actors at the subnational level of society and authorities. Ming-Chang Tsai teaches sociology in Taiwan. He was Fulbright Visiting Scholar in the Institute for Social, behavioral, and Economic Research, University of California at Santa Barbara (1998–99). He wishes to thank professors Diane Davis and Ian Roxborough for invaluable comments. An earlier version of this article was presented in the American Sociological Association Annual Meeting, August 1997, Toronto.